To Groupon or not to Groupon? That’s the question that countless restaurants ask themselves these days.

Most restaurants that run daily deal promotions negotiate the commission more aggressively than any other component. In fact, most merchants are willing to increase the price of their promotion (e.g. do a $20 for $40 instead of a $15 for $30) to get a better deal on commission.

This is a bad strategy for restaurants … unless the goal is to support Groupon’s stock price.

For those less familiar with daily deals, when Groupon sells a $10 for $20 voucher, they usually keep about 40% of the $10 voucher. Restaurants get to keep the rest and make more money when guests “over-spend” in the restaurant. Restaurant operators, ever the fiscal conservatives, dedicate most of their negotiating energy on getting the commission down an extra 5-10%.

Copilot has tracked almost 100 daily deal promotions across many different types of restaurants, as it turns out, the most critical component of a profitable deal isn’t the commission. It’s the price of the the voucher (i.e. doing $10 for $20 instead of $20 for $40). For most restaurants, setting the price low — close to the average guest spend is a good start — will encourage higher over-spend.

For the most profitable deals, overspending makes up 81% of their profits and the voucher sale only contributes 19%. In other words, the small change in the commission impacts the overall profitability of the promotion very little, whereas a change in price is the difference between a highly profitable promotion and one that barely breaks even.

The daily deal company knows the best way to increase their profits is to increase the price of the promotion, even if they decrease the commission rate as part of a “negotiation.” Bottom line: Merchants should focus on on overall price, not commission.